Cal Am wants to move on projects

California American Water is seeking to proceed with many of the Regional Water Project-related facilities it is solely responsible for no matter what happens with the rest of the mediation-stalled desal project.

That bid, along with a pair of formal responses from project partner Marina Coast Water District staunchly defending the current desal project, seems to raise questions about the eventual outcome of the mediation.

While Cal Am has acknowledged the $400 million regional desalination project is still subject to the mediation which started last summer and could be "delayed, modified or replaced with an alternative project," the firm insisted it is still committed to the original proposal.

At the same time, the private water purveyor argues that the Cal Am-only facilities would be necessary even if the current proposal is replaced by any of a number of possible alternative water supply projects already publicly introduced by the company.

That's because, said Cal Am, they're critical to the aquifer storage and recovery efforts that are a key part of the current project and the alternatives.

The proposals are all aimed at providing a replacement water source for Peninsula customers facing a state-ordered cutback in pumping from the Carmel River that takes full effect in 2016.

Cal Am has argued that allowing work on the facilities to proceed would help the company meet the deadline, pointing out the project has already been delayed.

Cal Am's Catherine Bowie said the company believes it already has the authority, as outlined in the desal project agreements, to go ahead with the facilities and is only seeking clarification from the state Public Utilities Commission.

Cal Am said the bid has earned backing of a wide range of Peninsula interests, including the Monterey Peninsula Water Management District, the Monterey Peninsula Chamber of Commerce, and a coalition of other Peninsula business interests. The Peninsula mayors group also sent a letter to the CPUC in support.

However, Marina Coast has vigorously opposed the Cal Am bid, arguing in filings with the CPUC that the current proposal is still valid and there's no reason to proceed with any element of the project without the rest of it.

In filings submitted last week, Marina Coast took the unusual step of attempting to file a response to the CPUC's Division of Ratepayer Advocates, which also argued against Cal Am's bid — albeit for a different reason — and reiterated its long-held position that the project agreements are legally binding and can't be challenged or subject to further review.

The DRA opposed Cal Am's bid by arguing the facilities were intended to be part of the entire project, and going ahead without the remainder of the proposal should trigger a new review of the size and price of the facilities.

Coming as it does after months of mediation between the desal project partners, Marina Coast's unflinching stance raises questions about whether the project agreements can absorb any appreciable changes in an attempt to answer concerns about its viability without drawing a legal challenge from the smallest partner.

Marina Coast general manager Jim Heitzman said district officials "still believe in the regional project" and the project agreements. Heitzman said any project changes other than its previously proposed operations and maintenance committee "would have to fit into the contract we signed."

In addition to Cal Am and Marina Coast, the project partnership includes the county Water Resources Agency, which spurred the mediation process saying the project agreements were voided by the alleged conflict of interest involving former county water board member Steve Collins, who has since been criminally charged in the matter.

Collins was paid $160,000 by RMC Water and Environment, a private firm working for Marina Coast at the time, for work on the project while he was on the county water board. He faces two felony conflict of interest counts for allegedly having a financial interest in the project agreements, along with a series of other charges. RMC also won a $28 million contract to manage the project.

If the desal project emerges largely unchanged from mediation, it's expected to draw heavy public criticism and a legal challenge that could further delay it for some time.

But it would fit with what some believe is the partnership's goal of avoiding further CPUC review.

County Counsel Charles McKee declined comment on the nature or timeline of the mediation talks, except to confirm that the process is continuing.

"Obviously, it's a very complex project and there are very complex issues that people can have disagreements on," he said. "But we are working to resolve them."

After a special closed session meeting Nov. 21, the Board of Supervisors' Tuesday agenda has no confidential desal project-related items for the first time in months.

Sources have indicated mediation sessions have been scheduled through the end of this week, but that they are likely close to a conclusion.

Heitzman said there's a "bright light at the end of the tunnel" with the talks, but added "I'm not sure if it's a train coming or the other side."

Cal Am has promised to file an update with the CPUC upon completion of mediation, but any other public input will likely have to occur through the two public agencies.

Administrative Law Judge Angela Minkin has announced she will schedule a pre-hearing conference with all parties on Cal Am's bid to continue with its own facilities.